Mr Jaitley, who is on a three-day visit to Bangladesh, inaugurated a cashless service at India's visa application centres in Dhaka's Shyamoli and Sylhet localities before announcing that it would now be available at all 12 Indian visa application centres across the country.

"If the economy depends mostly on cash, the curse of cash hits you," Mr Jaitley said during a talk at a hotel in Dhaka.

"Cash leads to corruption and tax evasion. Excessive cash operates against the poor. A lot of terror activity thrives on cash," bdnews24 quoted him as saying.

Mr Jaitley encouraged other countries to follow in India's footsteps in pushing for a less cash-based economy.

"Our roots are of common origin and so a lot of challenges are common in nature," Mr Jaitley said.

He also narrated a story on the success of Prime Minister Narendra Modi's Pradhan Mantri Jan Dhan Yojana, a flagship project on financial inclusion.

"One of the great challenges the Indian economy always faced was that it was cash-centric," Mr Jaitley said.

He said since in the first day in office, the government has taken initiatives to drive India in the direction of making the economy less cash-based.

"In 2014, we discovered that although we had a very large banking network in India, only 58 per cent of Indians or Indian families are connected to the banking system," he said, adding that it means 42 per cent of the population was completely outside financial inclusion.

"Therefore, the very first challenge before the government was how to bring them into the banking network," he said.